Oil bust takes hold

Eagle Ford workers losing jobs, pawning goods

Story by Jennifer Hiller | Photos by Carolyn Van Houten

Sept. 5, 2015

PLEASANTON — The sun burned through makeshift curtains, warming the apartment and throwing half-light across what remained in Devin Meurer’s life. The dog, the clothing heaped on the couch, the work boots discarded in the corner.

The first layoff seemed so long ago.

So did the second one.

At that moment, it hardly mattered that Meurer was recovering from a recent motorcycle wreck that had sent him by medical helicopter to San Antonio. He was broke after a year of sporadic employment — a disaster more pressing than the eight staples behind his left ear and the road rash that covered most of his back. It was Aug. 6, and he was desperate to return to his third job since Christmas, running a tool yard for a company that hauls oil field waste.

But his boss had called to warn him the company might close. Plunging crude oil prices had spooked investors.

“The contracts kind of blew up. The investors may not put more money in,” Meurer said. “He said we may all be looking for a job.”

Crude oil’s multiyear boom has turned to bust, catching Meurer and thousands of other workers in a cycle that has played out for generations in Texas.

The state could lose 140,000 jobs tied to the oil field this year, a forecast the Dallas branch of the Federal Reserve expects may worsen. Oil has tumbled from $100 per barrel last year to below $50 last week.

Economists talk about the supply-demand lesson playing out — how the world market has signaled to the industry it must stop pumping so much oil. Operators speak of technology gains and “transitioning the company to be successful in a lower oil price environment.”

But in the same way barbed-wire fences and thorn brush hide the workaday tasks of the oil patch, economic models and dry corporate reports don’t reveal what’s happening in hardscrabble communities — the pawned TVs, fractured relationships and RVs rolling out of South Texas to someplace more hopeful.

“This is my rock bottom right now,” Meurer said. “Hopefully, I just don’t lose that job.”

The good days

Before the first Eagle Ford well struck in October 2008, South Texas had a handful of industries — ranching, farming, hunting, prisons, Border Patrol and uranium mining. There was oil and gas, too, but not like this.

The Eagle Ford acted as a giant economic vacuum cleaner, sucking in workers, equipment and companies from all over the country. A drought scorched the land, but ranchers sold off herds and collected oil royalties instead. New fences and ranch gates popped up as quick as drilling rigs. Fickle employees job-hopped at will.

Meurer arrived in that swirl, during a time when companies hoped to find people just like him, who didn’t mind heat and hard work.

He had gone into the Marines at age 17 and came out eight years later, with two tours in Iraq, two Purple Hearts and shrapnel buried in his arm. Meurer had returned to his native Mississippi, but couldn’t find steady work that paid well. A friend called from South Texas.

“If you can come down you can find a job,” he told Meurer.

It was February 2014, and Meurer started driving. He had eight phone interviews on the way — everyone was hiring. He landed a job as a shop supervisor for a vacuum truck company, a good fit for the skills he learned as a mechanic on the Osprey.

“The Marine Corps is just the same as the oil field, 24-7. Oil is always pumping,” Meurer said.

By last fall, Meurer was earning $65,000 in salary, far less than his drivers, some of whom made more than $100,000 with overtime. But it was enough to afford a nice duplex, a $600 monthly truck payment and a $400 motorcycle payment.

He met Melissa Rios, a single mom who was filling in one night as a bartender at an oil field hangout. They moved in together and, for a short time, life seemed stable.

But last December, Meurer’s job was eliminated in a wave of layoffs.

A months-long search turned up a similar position in the spring. But he spoke no Spanish and his mechanics spoke no English.

That job ended too, by mutual agreement that the language barrier was too great to overcome.

By May, Meurer had used the GI Bill to earn his commercial driver’s license. But his world had folded in on itself, a maze of bad options weighed against worse ones.

Pawn the guns or TV first? Pay rent or a bill?

“I’m in quicksand,” Meurer said. “I’d rather go back to Iraq. At least I know who’s shooting at me over there. Here, every angle something is wrong. Everyone is shooting at you.”

Meurer needed a root canal, but couldn’t afford it. His truck and motorcycle had gone uninsured since January. Loan payments for both were late. He and Rios were looking for a place to hide the bike before it could get repossessed.

“Fumes and a prayer,” he said.

They already had pawned a $600 handbag, her jewelry, and Meurer’s knives and guns.

“How many times have we broken up?” he asked Rios.

Neither of them knew the answer.

“We’re stressed,” Rios said. “I’m surprised we’ve stayed together through all this because it’s been tough.”

On May 21, a flat-screen TV filled Meurer’s back seat, obscuring the view out the rear window. It was on the way to the pawn shop — the latest item scraped together like loose change and traded away to buy time.

But a smile of relief broke across his face. “I got a job,” Meurer said. It started May 26. Paychecks returned in June.

Over the summer, Meurer started digging out of the financial hole. In late July, though, a motorcycle crash undercut everything, throwing him out of work for weeks.

Oil field gamble

Eagle Ford production peaked in March at 1.7 million daily barrels, but then slid six straight months, the U.S. Energy Information Administration reports. The agency expects the field to pump 1.48 million barrels daily in September, still enough to fill 94 Olympic-sized swimming pools every day.

Because costs for everything from drilling to fracking have come down 30 percent this year, vast swaths of the field still are profitable at $60 per barrel, the oil price for much of the spring.

“The Eagle Ford at $60 a barrel is not a whole lot different than the Eagle Ford at $100 a barrel,” Gilmer said.

But crude oil prices around $40 turn the economics of the field upside down, and only 15 percent of the whole field makes money, Gilmer said.

Karr Ingham, an oil and gas economist, expects more job losses.

“I hate that the workers have to endure that,” Ingham said. “Did they have a sense that this is how the business tends to go?”

Some workers knew.

William Smith once made $1,700 a day as a company man, the one in charge of a well site for the operator. But that work dried up last fall.

“The oil field is a gamble, that’s all it is,” Smith said.

He called a family friend with a construction company and asked for a job. Smith made $15 an hour for a time, and now farms for his brother-in-law. He plans to return to the oil field as soon as it needs him again.

“What matters is you’re making something every payday,” Smith said. “There’s a lot of things a man can do for a living. If he thinks he’s too good for something, he’s got a lot of growing to do.”

Smith, 38, who started in the oil field 23 years ago, said the keys are to save, keep a positive attitude and find work to fill the slow times. “I lived beneath my means,” Smith said. “You can’t just be throwing money out the window. You don’t need two boats.”

Overnight at a drilling site near Hallettsville in late May, Lawrence Ullmann of Shiner talked about how white fleet pickups used to fill every parking lot in the region. His wireline crew members often slept in trucks because they couldn’t find hotel rooms.

Some people had been at the Hallettsville site for days, others for hours, but no one had met much traffic on the way there.

Hans Helland, the contract operator of the well, stood outside and waited for the wireline report. The sky turned from ink-black to purple before sunrise, outlining the derrick and oak trees against the sky. His family always referred to booms by what came next. “The beginning of the end is what we always called it,” Helland said.

In a small trailer, company man Nolan Sheedy kept the air conditioner low and the coffeepot fresh while he worked on reports on his laptop.

“It’s been too good for too long,” Sheedy said. “You just ride it out and hope you last. You hope your basin is the one they like.”

The numbers show an industry fallen on hard times.

The number of drilling rigs working in the Eagle Ford dropped by half in the past year, from 203 to 93. Across the country, more than 1,000 drilling rigs have been stacked.

McMullen County pumped 2.7 million barrels of oil in June, down from 3.6 million barrels the same month last year.

DeWitt County’s total property value, much of it based on oil and gas wealth, fell by $1.15 billion this year, down 16 percent.

The Eagle Ford’s biggest oil producers have issued a series of gloomy announcements. Houston-based EOG Resources made just $5.3 million in the second quarter, down 99 percent from the same period last year. ConocoPhillips last week said it would lay off 10 percent of its workforce. Marathon Oil Corp. posted a $386 million net income loss for the second quarter.

Dennis Elam, associate professor of accounting at Texas A&M University-San Antonio, said the smaller, more overleveraged shale companies are drilling wells just to pay debt. “They’re chasing the water right down the drain,” he said.

South Texans track other economic measures — traffic jams on rural roads or the advertised prices for hotel rooms in the region, now as low as $40.

A few years ago, DeWitt County Sheriff Jode Zavesky lost seven employees in three weeks to the oil field. The police academy in Victoria had to cancel classes because everyone was going to work in the oil field instead. “We’ve got great benefits,” Zavesky said. “But a young guy can’t buy diapers on great health insurance.”

Now, Zavesky has hired some of his old deputies back and said the police academy has seen a bump in enrollment.

He’s also seen an uptick in oil field crime — the theft of tools from work sites and people stripping copper from the drilling rigs parked along the side of the road.

Joy Tipton, who owns the Little White House Country Store in Fowlerton, judges the oil market by what time she starts to hear traffic rumbling down Texas 97. The noise used to start around 5 a.m., with trucks hauling sand, water and oil flowing past her place like a mechanical river. In August, it stayed quiet until around 9 a.m.

Blink-and-miss-it Fowlerton, with 62 residents the last time the Census Bureau bothered to count in 2000, hugs the La Salle-McMullen county lines. In recent months, a small restaurant and oil field supply company closed their doors.

That left Tipton as the only one to give unsolicited advice to oil field workers who stop to buy a soft drink or after-work beer: “Don’t speed. Don’t eat your dessert before you eat that sandwich. There’s a police officer down there.”

“Somebody’s got to take care of them,” Tipton said. “They don’t know how to do it.”

Boom-bust cycle

In some ways, Texas still hasn’t outrun the long shadow of the 1980s oil bust, an implosion that took down the state economy. So many people left the industry then, never to return, that there’s a gap in the workforce. Nearly everyone is old or young. The industry calls it the “great crew change,” and it means that a large part of the workforce never has seen a downturn.

“There’s this big hole in human resources,” said Peter Bommer, an executive with San Antonio-based Abraxas Petroleum, “that’s been filled in this latest boom by younger people. They haven’t seen the cycles and they are freaked out by it. A lot of the pain is out there in the services, the guys driving water trucks, the roughnecks.”

Bommer helps run the local Oilfield Christian Fellowship chapter, a ministry that distributes oil field Bibles. These days at the monthly meeting in San Antonio, prayer and words of encouragement are followed by an informal networking session, so everyone knows who needs work and who might have a lead.

Workers on the production and well maintenance side of the business haven’t faced the same level of uncertainty this year.

In early spring, a workover crew from East Texas had settled into a comfortable routine in a corner of the Cotulla RV Park in La Salle County. The crew played soccer on Tuesday nights with employees from a Mexican restaurant. Every other weekend, wives and children would visit. Like water from a hose, in the evenings everyone spilled from RVs to sit in camping chairs and on ice chests, grilling and watching a TV propped in an open doorway.

“We’re used to living out here now,” said Henry Pinedo. “When we get back home, we feel kind of out of place, and everybody is ready to come back to work. This is home for us now.”

“Yep,” said Todd Lansford, originally from Wortham in Central Texas. “I love it down here. I love the country.”

For years, Lansford ran heavy equipment to build drilling pads but when that work slowed, he joined this crew as a roustabout.

“If I was doing what I used to do, I’d be out of a job because they ain’t drilling,” Lansford said. “We’re maintenance. You’ve got to take care of the wells. I wanted to get on this because it’s not going nowhere.”

But even the maintenance side of the business is in belt-tightening mode. Most of the workover crew from East Texas soon rolled out of Cotulla to another spot in Dilley, where the boss had some land to park everyone’s RVs more cheaply.

Around 22 trailers left at once, and the Cotulla RV Park looked a little emptier.

All spring, storms had washed across the rolling coastal prairie and brush country, bringing it back to life with blankets of waving grass and bar-ditch sunflowers on the sides of the road. The five-year drought that punished South Texas broke.

But rain and high winds delayed oil field work. “A lot of the guys don’t work when it rains. It’s been raining a lot,” Carl said. “The rain has not helped the situation with the price of oil.”

On a recent evening, the blue sky washed out to gray and the sun dipped below the line of honey mesquite, creating color so bright it was no color at all. An insect hum emerged from the nearby cemetery, and Carl walked the RV park to pick up bits of trash and check on a litter of stray kittens.

Carl had to let his one employee go. His favorite restaurant had closed. On a recent weekend, seven RVs left and two arrived. “That’s not what you want to see,” Carl said.

A “for sale” sign hung on an RV. Carl used to get $1,400 to $1,500 a month for it, but that had dropped to around $800.

“I had six of them at one time,” Carl said. He sold the others during the boom and did well. This was his last one.

Starting over

Eric Bell of San Antonio energy services umbrella company Group 42, said the U.S. oil business has gone through the stages of grieving this year. “The first quarter was a complete sense of denial,” Bell said.

Then came anger and a “bargaining and sad mopey phase” when everyone talked about how oil would pop to $70 or $80 by summer. It didn’t. “Now finally it kind of seems like there’s a sense of resignation or acceptance,” Bell said. “Some companies are just in trouble.”

And yet, the familiar grind of the oil patch continued in so many ways. The Eagle Ford this year still is expected to draw $20 billion in industry investment, far more than any other field, says research firm Wood Mackenzie.

One August night under neon lights at a bar in Cotulla, roustabout Tino Gaona, 55, of El Campo shot pool and poured money into the jukebox. The drillers he was with called him an all-around hand, the kind of worker who could do anything needed on their workover rigs.

“Everyone wants Tino on their crew,” said Sean Dulany, a driller.

They stayed out late, and the next morning, as roosters crowed and the line for taco and coffee at the Stripes gas station stretched 20 deep, Gaona overslept. He was the only person living in a rental with five bedrooms for oil field workers.

Friends arrived in a white work pickup.

“Get your ass up,” one of them shouted, laughing.

“I forgot to set my alarm,” Gaona said. Before he ran out the door, he knelt to pray beside his bed — a ritual he never missed. It was his youngest daughter’s 24th birthday.

“I miss a lot of birthdays and holidays, but that’s how it goes,” Gaona said.

John Baen, a professor at the University of North Texas, owns slices of mineral rights across the state and a South Texas ranch that was leased to an oil company but never drilled.

“Every time there’s a boom, there’s a bust,” Baen said. “I don’t BS myself. The snake is still coming out of the hole. We don’t know where this is going.”

Baen has received four bankruptcy notices — missives from failing companies that normally send him “mailbox money,” and now send legal notices letting him know he can make a claim in a bankruptcy court.

He called this the “oil curse” for Texas — everything seems great until it doesn’t.

“It matters what it is now. Forget yesterday. Forget what it was,” Baen said.

August and early September, oil prices veered below $40 per barrel, shot up to $50 and then dipped again into the mid-$40s. In Pleasanton, Meurer’s troubles multiplied.

The New York investors backed out. Meurer’s boss shut down the company. His dog, Rocco, died, choked by his own chain while inside a friend’s home. His cellphone was turned off.

He considered returning to Mississippi, but his father had lost his job as well.

Meurer needed to job hunt — in the oil field, as a mechanic or as a driver. Anything really. But the motorcycle accident left him with blurred vision, which hadn’t yet cleared. He needed to see well to work.

He visited Rios at her job last week, and as they stood outside for a break, the stress made him throw up.

They had broken up over the summer and Meurer had moved to a cheaper apartment. They have reunited, tentatively, in the aftermath of his crash and Rocco’s death.

Rios had a lead on a different rental home. Her boss at a Pleasanton convenience store had rented space for a new bar and wanted her to run it.

“Lots of work,” Rios said, brightening at the prospect.

Meurer nodded. They would figure out something. He hoped he could return to a life of full work days. He was back to the beginning, starting over with nothing in South Texas.